Analyst: Apple’s iTunes Radio Has This Advantage Over Pandora

Although Pandora (NYSE:P) is currently the biggest online radio service provider, it may soon face some stiff competition from Apple’s (NASDAQ:AAPL) new iTunes Radio service. Radio listening in cars is one major area where Pandora may be especially vulnerable to Apple.

By combining the Siri Eyes Free functionality with its new iTunes Radio Service, Apple is creating a serious threat to Pandora’s market dominance notes BTIG analyst Richard Greenfield viaBloomberg. This automotive advantage could give Apple a significant edge over Pandora since more than half of all radio listening takes place in cars.

“Apple is leveraging its expertise in marrying hardware and software design to strengthen their ecosystem as they try to take a more active role in the ‘connected car,’” writes Greenfield. Based on this market advantage, the analyst recommends selling Pandora shares.

As part of its overall strategy to integrate its services into automobiles, Apple also introduced the “iOS in the Car” functionality at this year’s Worldwide Developers Conference. Acura, Chevrolet, Ferrari, Honda (NYSE:HMC), Hyundai, Infiniti, Jaguar, Kia, Mercedes-Benz, Nissan, Opel, and Volvo have all announced iOS in the Car support for their vehicles.

Greenfield, who has been testing a pre-release version of iTunes Radio, notes that Eyes Free Siri will automatically default to Apple’s services when it comes to music commands. This will naturally incline Siri users towards Apple’s native music application.

“Apple is clearly favoring their native music app with radio based commands. If you were in Pandora and used Siri with the command ‘play Jazz Radio’ it would literally stop Pandora, open up iTunes Radio and starts playing the iTunes Radio Jazz station,” states Greenfield.

Could Siri Eyes Free and iTunes Radio be Apple’s initial steps into a lucrative auto accessory market where cars are just another information appliance for Apple to make accessories for? Here’s how Apple and Pandora finished out the week on Friday.